Why Apple Products Are at Risk to Skyrocket in Price

Raquel Nash |Tuesday, September 11, 2018

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Ford Focus Active the small crossover causing so much controversy in the US

Last week, Apple said a proposed new round of $200 billion in additional tariffs on Chinese imports would raise prices on some of its products, including the Apple Watch and the Mac mini. But despite Trump's claims, Ford insisted that this was not the case and that the Focus hatchback will not be built in the United States.

For now, that means Ford simply won't sell the vehicle in the United States.

Fact is, back on July 6, Trump began imposing 25 percent tariffs on $34 billion in Chinese imports, which included vehicles like the Focus Active.

The Ford Focus Active has never been sold in the USA, and Ford does not now import any vehicles from China.

The company said tariffs would hit "a wide range of Apple products", including computers, watches, adapters, chargers and tools used in its USA manufacturing, fix and data centers. "We hope, instead, that you will reconsider these measures and work to find other, more effective solutions that leave the USA economy and USA consumer stronger and healthier than ever before", Apple said.

Technically, that's true. Ford can build the Focus Active at a domestic plant, just like it can give the next Ford Mustang Shelby GT500 a manual transmission. "This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle". More broadly, tariffs will lead to higher US consumer prices, lower overall USA economic growth, and other unintended economic consequences.

Apple, however, did not offer an estimate of how much the tariffs would increase its costs but encouraged Lighthizer to reconsider the measures.

"Ford is one of the companies that has the highest US content and the most USA autoworkers of any company", said Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor. Majority are luxury cars and SUVs with higher profit margins that can cover higher USA wages, she said.

The tariffs changed everything. Last month, it added tariffs to another $16 billion in Chinese goods and is readying taxes on another $200 billion worth.

Loup Ventures analyst Gene Munster predicts the tariffs would only cause Apple's revenue to drop by 5% in 2019 because the amount of money the affected products make is such a small slice of the company's money-making machine.

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